To borrow a phrase from Rod Serling, imagine if you will:
You did the responsible thing by executing an estate plan to get your affairs in order. Your documents include incapacity documents — an Advance Health Care Directive for medical decisions, and a Durable Power of Attorney for financial affairs. Some time after you sign your estate plan, you become too ill to manage your affairs. The people you named in your incapacity documents do their job: your attorney-in-fact obtains a doctor’s note to prove you are too ill to manage your own affairs unaided. However, when your attorney-in-fact goes to your bank to handle some business on your behalf, the bank refuses to honor the Durable Power of Attorney…at the worst possible time.
This scenario is becoming all too common among banks, especially large national banks. Luckily, California Probate Code Sections 4305 and 4306 provide a way to ensure that the Durable Power of Attorney is honored.
Probate Code § 4305 provides that an attorney-in-fact can sign an affidavit under penalty of perjury to confirm that the power of attorney is valid and has not been revoked or terminated. The signed affidavit is deemed conclusive proof (for the benefit of third parties like banks) that the power of attorney is in fact valid. Under Probate Code § 4305, third parties are not liable for losses incurred if they rely on the affidavit: in other words, the bank is protected if anyone claims they should not have accepted the power of attorney. So, there is no good reason for a bank to refuse to accept a power of attorney when the attorney-in-fact presents the following items: (1) the power of attorney; (2) the doctor’s note (if the power of attorney requires one before it is effective); and (3) the affidavit.
Probate Code § 4306 provides that, if a third party refuses to accept the authority provided in the power of attorney after receiving the affidavit, then they can be liable for the attorney’s fees incurred to confirm the attorney-in-fact’s authority under the power of attorney. This section is the “stick” to the “carrot” of § 4305.
If you are an attorney-in-fact for someone who is too ill to manage their own affairs, and a bank refuses to accept the power of attorney, then you should consider consulting an attorney.